Reading Patrick RothFuss's The name of the Wind and Wise Man's Fear for the third time again.

Fucking cracking reads, cannot fault them and I am a tireless and assiduous reader. Flawless execution. I don't even like fantasy that much, but Rothfuss isn't too fantastical and reminds me of Iain Banks when he was good. But with more beard. Much more beard.

Life continues, MBW's knee is holding up and the surgeons reckon it'll hold until next year when The Boy will be weaned and less dependant on her. So that's good. MiniBreaker can now count to 11 (come on, you didn't think I'd let her just go to ten?), sing Twinkle Twinkle, Monkeys Jumping on the bed and a couple of other songs too. Bloody hell she'll be off to Uni next time I look...

For LARGEBASTARD Bank, we're either shitting ourselves or looking like hungry vultures overlooking the corpse of USia. Every trading desk in every timezone will be populated from Sunday night onwards until Wednesday last bell.

That's some serious commitment.

Me, I think USia should just default, get the poison out of the system. Do you want vicious flu for 2 days, or 5 years with a constant nagging cough and an inability to climb stairs?

That's what's on offer. Iceland managed it, nicely, if USia is savvy then they can have cake and eat it due to owning the reserve currency. For now at least; the reserve currency will be the CNY/CNH by 2020 anyway. Might as well gamble while you've got the cards, Saint Obama.

I originally picked up both as audiobooks, and the narrator did a great job of it. They're one of the few books that I've listened to as audiobooks, though, that I'd like to have in actual paper. I just hope the third in the series manages to wrap everything up - I was a bit concerned about that at the end of the second one.--
The amount of suck that you can put up with can be mind-boggling, but it only really hits you when it then ceases to suck. -- Kellnerin

Over half the US debt is owed to US citizens. If Uncle Sam defaults, that's going to set the US economy into a massive tailspin. That would be such a lovely game to play for us to play at.There is no more degenerate kind of state than that in which the richest are supposed to be the best.Cicero, The Republic

The US has faced far worse debt to GDP ratios in the past and has pulled through just fine.

Granted, if the present state of a high spending to GDP ratio and a low taxation to GDP ration holds, we'll eventually reach the state of being well and truly up the creek. But, at this point in time, that's still off in the mysterious future.

There is no more degenerate kind of state than that in which the richest are supposed to be the best.Cicero, The Republic

I admit that my knowledge of finance is sketchy at best, but don't those graphs illustrate the huge amount spent on WWII, under lend-lease (which wrote off a load of money equivalents) and the equally large loans given to e.g. the UK? Surely the wars in Afghanistan and Iraq shouldn't come close to that?

But, unlike during WWII, taxes were cut. Government spending as a percentage of GDP (at the federal level) in the US has increased slightly ever since the Reagan years while taxes as percentage of GDP have dropped ever since the Reagan years.

Or, put another way, Eisenhower refused to cut taxes until the debt was paid off. But from Reagan on, taxes have decreased while the debt has increased. The one exception beting a couple of years under Clinton.

There is no more degenerate kind of state than that in which the richest are supposed to be the best.Cicero, The Republic

Wage inflation (or lack thereof) is also an important factor. For example, during the Great Depression, the US didn't experience much in the way of inflation. But wages either didn't even manage to keep up with inflation or actually deflated. So while a dollar bought less, the problem facing most workers was that they had fewer dollars than they had had in years prior.

Or put another way, I don't really care about price inflation of 3% if my salary is going up by 4% or 5% during the same span of time. And, if most of my debt is in a fixed interest mortgage, inflation is actually helping me out because I'm effectively paying back my loan with cheaper money.

But if my salary is stagnant or deflating, then it hurts.

Which moves the question to wage stagnation and wage deflation and their causes. I suspect that the debt doesn't directly affect those issues. Government spending cuts, however, do directly affect those issues. When the mail man makes less money this year than the year before because of across the board spending cuts, he can't buy as many loaves of bread. The bread seller, in turn, doesn't make as much profit because she doesn't sell as much bread.

There is no more degenerate kind of state than that in which the richest are supposed to be the best.Cicero, The Republic

Wages and salaries accounted for just 1 percent of economic growth in the first 18 months after economists declared that the recession had ended in June 2009.
In the same period after the 2001 recession, wages and salaries accounted for 15 percent. They were 50 percent after the 1991-92 recession and 25 percent after the 1981-82 recession.

Corporate profits, by contrast, accounted for an unprecedented 88 percent of economic growth during those first 18 months. That's compared with 53 percent after the 2001 recession, nothing after the 1991-92 recession and 28 percent after the 1981-82 recession.

However CEOs and other corporate officers want to spin the reasons, the core of wage stagnation in the US is record profit-taking by firms. The more costs (especially labor costs) are minimized, the more profits are maximized. This drives up share prices which, in turn, makes stock options and the like far more profitable for corporate officers. In many cases, dividends aren't even being payed out to investors in order in inflate share price. Guess who benefits from that? Surprise! CEOs, CFOs, etc.

There is no more degenerate kind of state than that in which the richest are supposed to be the best.Cicero, The Republic

Interest on the debt is only a part of the problem facting the US. Defaulting won't bring the US any closer to restructuring its situation than not-defaulting, it will just push the problem out by a decade, if that.

Defaulting won't end the wars in Afghanistan and Iraq. It won't close US bases in Germany, Japan and S. Korea. It won't control Medicare costs. It would ensure that Social Security never gets paid back for all of the money that the rest of the government borrowed from it and create a whole new crisis.

Moreover, like I replied to ucb, most T-bills are owned by US citizens. Defaulting would essentially nuke the US economy. Aside from retirement accounts heavily invested in treasuries, it would burn large institutional investors, including most charitable foundations of any significant size. So not only would our grandmas and grandpas not have anything to eat, they're wouldn't be any charities with the funds to open soup kitchens to feed them.

There is no more degenerate kind of state than that in which the richest are supposed to be the best.Cicero, The Republic

I find it ironic that the anti-tax brigades are the ones flirting with defaulting given that it would be in a sense a massive wealth transfer from private citizens to the government. Apparently requiring a citizen to pay $10 for services is evil but borrowing $10 to pay for services and then refusing to pay it back is okey-dokey.---[ucblockhead is] useless and subhuman

The revolution can't happen until the world is effectively reduced to two classes: capitalists and workers. Then when the workers overthrow the capitalists, only the workers remain, and since the workers are all in the same socio-economic class, paradise ensues.

In other words, the real revolution cannot come until capitalism does fuck everyone else up the ass without lube or a reacharound.

There is no more degenerate kind of state than that in which the richest are supposed to be the best.Cicero, The Republic

I really like how the Republicans choose to paint us into a corner for the sake of their ideology.

We can't raise taxes or do anything that even vaguely resembles a tax increase.
We must fund these wars.
We can't raise the debt ceiling.

And they play dumb about all the other stuff we need to keep the country running (like: roads, disaster relief, education) which are being severely underfunded already because we've been trying to manage the first two bullet points. Keeping all three bullet points paints us into a corner. We are getting boned.

The US can only default if it's decided that Social Security payments and the military take precedence over debt service. The 14th Amendment would seem to indicate that debt service takes precedence. So actual default is highly unlikely. What is more likely would be a repeat of the Great Depression as the US Government slashes it's budget over night to service debt and provide whatever government can be allowed with whatever money might be left. Of course given that taxes aren't a steady stream it's going to be a total nightmare. It's a good thing that there are free spreadsheet software available since they won't have money to pay for Excel licenses to keep track of it.

the liberals and the tea partiers are both being loud about the current deal, and being ticked off at their side and the other side, but I don't think that they represent enough voters to know how things will actually turn out. Like the graphic you showed, many people are not paying as much attention to the situation, as to some COURT TV case.

The spending cuts will not be blamed for a poor economy. You have to have a better understanding of economics and finance than 80% of Americans possess. "Job killing tax increases." "Job killing debt increases." That's the sort of thing the majority of people hear and it doesn't take much to get it to stick in their heads. Cutting government spending during a depressed economy is going to cause a further degradation of the economy. Economics 101. Demand is composed of business, consumer and government. Consumers are tapped out. Business is unwilling to spend. Government is cutting demand. Without demand there's no need to increase production of goods and services. Repeat. The thing is that the Republicans won't be blamed. The White House will be blamed as it already is. Facts are irrelevent. It all depends on the PR machine. And the Republicans own the PR world. The 80% who have insufficient understanding of economics and finance will buy the PR and many of them will vote.

It's not so much that facts are irrelevent by lm (4.00 / 0) #34Tue Aug 02, 2011 at 08:24:55 AM EST

Rather it's that the important thing (for winning elections, anyway) is the public perception of the facts.

The last poll I saw (granted, it was a self-selecting Internet poll) suggested that 2/3 of the US thinks the "compromise" bill marks victory for either Republicans or the Tea Party while 1/3 think thinks it favors Democratic policy. That pretty much matches what I'm seeing and hearing from friends and people on the street. Boehner really stepped in and made himself the driver of this bill.

There is no more degenerate kind of state than that in which the richest are supposed to be the best.Cicero, The Republic

While I do think that Obama conceded way too much, the flip side is that the public perception is that by compromising he effectively gave ownership of the economy to the Republicans. That won't mollify the Democratic base very much. But where are they going to go? And it won't convert the Republican base but they were never going to vote for Obama in 2012 anyway. The people in the middle, however, will see this as the Republican party putting their plan into effect. The misery it creates will all belong to the GOP.There is no more degenerate kind of state than that in which the richest are supposed to be the best.Cicero, The Republic

I don't like the dichotomy of "who else" though. I'm not sold that the middle is going to be swayed by this. Obama comes across as a feckless leader. I can see Romney or Huntsman picking up a lot of the middle if they can get out of the primaries. Really it depends on who gets through the GOP primary round. If it's an exteremist then the middle will flock to Obama. If it's Romney or Huntsman then Obama may see himself the loser. It's too early for me to guess right now. I don't see a clear path for a GOP to win right now and that's probably still good for Obama. What I do see is a clear path for the GOP to take the Senate and hold the House. When the economy falls again, and it will, the Democrats are going to take it in the shorts. It won't be their fault, but they're going to take it in the shorts.

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